About 10 years ago, a perfect storm began to form in Washington DC.
Near the end of the Clinton administration—and this isn’t solely the fault of either party—the powers that be decided that home ownership was a good thing and that even people who did not actually possess the means to own a home should be able to anyway.
When George W. Bush took over, he agreed.
Then, the young geniuses on Wall Street, the folks who call themselves the “masters of the universe” came up with the cockamamie idea that they could eliminate risk by the way they priced home mortgages. In other words, if you were not a “prime” risk, you’d pay more for your mortgage and even if you defaulted, the bank would take your property and be made whole. And politicians of all ideologies leaned on Fannie Mae and Freddia Mac, the quasi-Government mortgage buyers and packagers to take mortgages of lesser quality, creating a “sub-prime” market.
For a number of real world reasons, of course, it was nonsense and we had a housing bubble during which people who made $50,000 a year were given $400,000 mortgages on houses which today are worth $150,000. And, of course, mostly not owned by those buyers.
The truth is that most people knew it was nonsense while it was happening but they were making money then so they shut up.
Well, similarly bright young geniuses are now holding forth in Barack Obama’s White House, led by Barack Obama and they want a health care plan now.
Health care is an incredibly complicated issue. We actually have the best health care system in the world, but it is undeniably expensive.
President Obama wants everybody to have the benefit of that system but it is obvious that the government simply doesn’t have the money to accomplish that goal. And neither does business or individuals.
So his geniuses have come up with a new idea.
We’ll do it with “savings”.
First, we pass a government program which says everyone must have health insurance coverage. And then, we’ll introduce modern rules, wellness and all that stuff into the system and we’ll save so much money that we’ll pay for the government program with those savings. Big, bold, broad brush strokes.
Right.
Now the difference between the young White House geniuses and the young Wall Street geniuses is motivation. The Wall Street guys wanted to get rich. The White House guys are ideological true believers who will only get rich after they’ve left government and gone to work for the people whose nest they feathered while they were in the White House.
But, just as the Wall Street geniuses’ idea was stupid and did not work, neither will this one.
We don’t disagree that there ought to be a way to extend health care to everybody. But you can’t do it by waving a magic wand. Like it or not, the only way to pay for a government plan is to cut another government plan or to raise taxes, both of which are probably not going to be acceptable in the real world.
Failing that, perhaps we should lower our sights and talk about catastrophic coverage—giving everybody a safety net with a $25,000 deductible. Or doing what Oral Roberts once did when his University had a medical school. He trained doctors for free if they would devote the first part of they careers to missionary work. You can do missionary work in rural or inner city America, too. Not every med school graduate needs to be an ob-gyn in Beverly Hills.
We could allow our citizens to get the same drug savings they essentially are paying for when they pay top dollar for Lipator while citizens of other nations pay a lot less because of our foreign policy.
But you can’t pass a law which has no real basis in fact and then not expect, 10 years later, to see a big crash just like the housing market crash of the last year.
And even Barack Obama knows that.
FRED WEINBERG
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